What’s next for the Illinois Power Agency?

The agency that procures power on behalf of millions of Illinois residents needs a new leader. The Illinois Power Agency (IPA) procures power for all Illinois utilities serving over 100,000 customers. In other words, the IPA brokers deals for ComEd and Ameren, which in turn sell the power to over five million customers. The agency is also responsible for achieving the state’s energy efficiency and renewable energy goals.

The General Assembly created the IPA after a bungled reverse auction that was intended to increase competition in the state’s electricity market. The auction was structured in a way that gave the two utilities a marked advantage in the bidding process and lead to increased residential rates of 21 percent for ComEd customers and 36 percent to 53 percent for Ameren customers. These higher rates created larger profits for the utilities, and the ensuing backlash lead Attorney General Lisa Madigan to file a formal complaint with federal regulators accusing Ameren, Exelon (ComEd’s parent company) and 13 power marketers of price manipulation. The Illinois Commerce Commission intervened and negotiated a $1 billion dollar payout to Ameren and ComEd customers, and the General Assembly began work on the Illinois Power Agency Act of 2007, which created the Illinois Power Agency.

Mark Pruitt became the IPA’s first Director upon his appointment by then-governor Rod Blagojevich. His experience with power procurement for municipal utilities and power purchasing for the University of Illinois campuses made him an ideal candidate for the position. Pruitt, however, opposed Governor Pat Quinn’s preferred method for meeting the state’s renewable energy targets and criticized the governor’s office for “sweeping” IPA funds to fill budget gaps. Quinn elected to choose a new director in October 2011. Pruitt’s successor, Arlene Juracek, worked for ComEd/Exelon for nearly 35 years and was part of the negotiating team that designed the reverse auction process and the deregulation of the electricity industry in Illinois. Quinn’s appointment of Juracek raised eyebrows in the General Assembly and in the office of the Attorney General.

The job description for IPA Director requires 15 years of experience in the electric industry and an advanced degree in a related field. It also states that the director could not have, “for two years prior to appointment or for two years after he or she leaves his or her position, be employed by an electric utility, independent power producer, power marketer, or alternative retail electric supplier.” Juracek left Exelon in 2007, but her coziness with the energy giant smacked of the revolving door politics that afflicts every level of government.

Quinn’s appointment requires approval by the State Senate, which hasn’t happened. Juracek is officially the Acting Director, and the commission that oversees the IPA has commenced a nationwide search for a new director who, if approved, would receive a two-year appointment. The governor was responsible for overseeing the IPA until November 2011, when the General Assembly voted to strip Quinn of those duties and place the agency within the purview of the Executive Ethics Commission, a nine-member commission that “promotes ethics in public service and ensures that the State’s business is conducted with efficiency, transparency, fairness, and integrity.” The nine commissioners are selected as follows: the governor appoints five, and the Attorney General, Secretary of State, Comptroller, and Treasurer each appoint one. No more than five commissioners may be of the same political party.

Whether this change will benefit Illinoisans or is merely superficial remains to be seen. The agency is charged with meeting the renewable energy goals established by state legislation. The General Assembly and the utilities, and not the IPA, set these goals. For example, the Energy Infrastructure Modernization Act aka the Smart Grid Bill gives ComEd and Ameren the power to raise electricity rates to recoup investment in grid infrastructure. The Illinois Commerce Commission (ICC) determines the size of the state’s renewable energy procurement plan and consumers ability to sell electricity back to utilities through net metering.

Politics and politicking notwithstanding, the IPA continues to wield enormous influence. A one-person outfit before Pruitt hired a chief financial officer in January 2011, the agency operates on behalf of over five million utility customers. In the same week his tenured ended, Pruitt released a report stating his agency saved consumers $1.64 billion since 2009. Currently the IPA is working with municipalities seeking to aggregate their electricity consumption. Community municipal aggregation allows municipal and county governments to purchase electricity on behalf of residential and small business customers, and negotiate a price with an alternative electric supplier rather than the utility that serves the area. The ICC website includes a list of communities pursuing municipal utility aggregation on the March 2012 ballot, and of those communities that have already elected to opt-out of the utility program.